Royalties Galore
The amicable signature of a new oil agreement is a rare source of gratification these days, and the Anglo-Iranian Oil Company, which owns fifty per cent. of the shares in the Kuwait Oil Company, must find it almost relaxing to change from dealing with the Persian Mejlis to dealing with the Sheikh of Kuwait. The new agreement for Kuwait was obviously due. Since the Americans set the new pattern for Middle East oil concessions with their " fifty-fifty " agreement with Saudi Arabia, this has been the model with which all other concessions will have to conform. The clause in the new Kuwait agreement which is of most interest is that which assures that the Sheikh's half of the profits is calculated before taxation is deducted. As the American Treasury habitually allows a taxation rebate to com- panics operating abroad, and as the Kuwait Oil Company is half American-owned, this new agreement will clearly tend to force the British Treasury into line with the American ; this, in any case, was one of the morals* to be drawn from the Anglo-Iranian Oil Company's statement last week. But the implications of the new agreement are really of more interest than its actual terms. Here is a little territory, consisting virtually of a small port and two thousand miles of desert, with a population of about 160,000, which is from now on going to receive as much as £50 million a year because of the oil which bountiful nature has accumulated under its sands. What on earth is Kuwait going to do with all the money, which is getting on for twice as much as the budget of its neighbour, Iraq, in a normal year? There is a limit to the number of hospitals and schools that this little country needs, but if it is not to become a curse some outlet must be found for the money. The decision rests with one man alone—the Sheikh of Kuwait, who is his country's absolute ruler, and to whom the oil royalties are paid directly. He has shown himself to be a man of sense and moderation, and several useful outlets for his wealth, beyond the confines of his country, have no doubt already suggested themselves to him. The rehabi- litation of some of the refugees from Palestine may be one.
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